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Bitcoin; DO NOT SELL!

First off, Neutral ATM cannot determine which way Bitcoin will end up going in later 2022.  The charts say bearish, but there are compelling bullish cases to be made.  Let’s just say it’s 50/50.  Either way it does go.  DO NOT SELL!  There are far too many variables going on in 2022.  War in Ukraine, and another on deck in Taiwan, also for 2022.  This year will go down in history books!  The global macro implications are massive.  We spent several blogs last week on bearish cases.  We will look at bullish cases more this week.  


If the bearish case prevails, buy as much $20K or cheaper Bitcoin as you can.  This is why we say patience all the time!  If it turns bullish, you held your Bitcoin and bought every dip before.  So your good, right?  Now lets look at the DXY chart.  We see a strong W, double bottom.  Bitcoin is inversely coorelated to the DXY which is the US dollar index.  Notice how fast the dollar did drop after 2001 and 2002 highs.  Rate hikes and hawkish narratives from the Fed have strengthened the dollar.  Yet Europe, and most of the developed world in the eastern hemisphere  is buying Russian Oil and Gas, paying in Rubles not USD!  Does that strengthen the dollar?  Not at all.  It weakens it.  So we have 15% to 20% real inflation in the US.  While the Fed is raising rates?  How long can the DXY keep rising?:


Neutral ATM - Bitcoin ATM’s in Texas - Bitcoin; DO NOT SELL!


At some point, this year.  Won’t the Fed have to cut rates due to economic devestation.  We have had one rate hike of 25 bps so far, and already the US GDP contracted -1.4% and the Nasdaq is down -19%!  Once GDP is -3% and the Nasdaq is -40%, the direction the Fed is taking will have to change!  See this Charlie Bilello tweet from today, about the fed funds futures.   They expect 2.5% to 3% fed funds rate (FFR) later this year.  Bringing the FFR to those levels looks, at this point, like it will collapse the economy into a huge recession.  Before that collamity starts, we see the FED changing course.  Here is the chart from Charlie Bilello, click here to view on twitter.


Now let’s relate that to Bitcoin.  The DXY really does explain why Bitcoin has been bearish in 2022.  See this chart with DXY in green and BTC price action in orange:


Neutral ATM - Bitcoin ATM’s in Texas - Bitcoin; DO NOT SELL!


The DXY historically makes a V direction change and goes the opporsite direction for quite a while.  Bitcoin goes the opposite direction every time we see the DXY chart reverse.  How much longer can the DXY be this strong.  It is obvious the dollar is NOT strong.  It is propped up by the Fed!  These actions are taking a toll on the economy and jobs (unemployment). There will be growing pressure to reverse course.  Now check out this chart from Crypto Zombie:


Neutral ATM - Bitcoin ATM’s in Texas - Bitcoin; DO NOT SELL!


Now that Bitcoin has broken out of the ascending channel, is it possible it keeps trending downwards, until that channel appears as a bullish descending channel?  Descending channels are bull flags, they break up most of the time!  This is a shift that has not completed, but if $36K to $37K holds as support, short term.  This descending channel could be the result.  We have to wait and see how this unfolds.


Next we have charts from Steve Courtney, first a chart showing bullish divergence beginning to form between BTC price action and falling RSI:


Neutral ATM - Bitcoin ATM’s in Texas - Bitcoin; DO NOT SELL!


Here is an example of Steve Courtney’s analysis.  He is very good at this.  Price action below the 200 MA, RSI below 40, Stochastic RSI below 20.  Whenever that happens, that is a long term bottom. Bitcoin always goes on a long bull run after that.  We have not used the words “long bull run” relating to Bitcoin since October/November!  In the chart below, we see this happened in 2018 and again in 2020.  See the chart below: